Is TSLA Stock Still Unmatched in the Electric Vehicle Space?
Electric vehicle stocks have exploded in value over the past few years. After all, with country after country introducing legislation that will limit emissions and favor electric cars, it makes perfect sense that electric vehicle stocks would catch the eye of investors.
One electric vehicle stock in particular, Tesla Inc (NASDAQ:TSLA), has come to dominate not just the sector, but the entire stock market. But is TSLA stock’s run sustainable? And just as important, can another company recreate its success?
Let’s examine the first question: Is Tesla stock able to sustain its growth?
I’d argue yes.
There’s a whole cottage industry around shorting TSLA stock and predicting its downfall. That’s nothing new and, frankly, that’s never going to abate. Tesla stock’s rapid rise and global dominance has made it the locus of both extreme admiration and ire.
But TSLA stock investors who’ve been around for the long haul have experienced tremendous gains.
I was very bullish on Tesla stock going into the COVID-19 pandemic, and that bullishness has been astonishingly justified. The stock shot up by more than 1,400% in just two years, speaking to the massive potential that TSLA stock bulls like me were observing.
Chart courtesy of StockCharts.com
After all, the company is hoping to not only dominate the car world, but also stake out a claim to the entire green energy sector.
But that leaves us with an interesting question: are Tesla stock’s best days behind it, or will it continue to see massive spikes.
As I wrote in a recent article dissecting Tesla Inc’s robot pitch, I believe that the company indeed has a higher ceiling that it has yet to reach.
In that article, I explained that, even if the company continues apace with its electric vehicle production and sales growth, we can expect to see TSLA stock’s price soar.
But let’s say just one of Tesla Inc’s moonshot ideas (e.g., robots, artificial intelligence to drive vehicles, batteries to power homes) comes through; you’re looking at not just another powerhouse electric vehicle company, but potentially a revolutionary company that could be what General Electric Company (NYSE:GE) was in the 1950s.
So that’s where I stand on Tesla stock.
Is there risk? Absolutely. The company certainly appears to be overvalued when you take into account its price-to-earnings ratio, which is estimated to be at the comically high figure of 219.1. (Source: “TSLA Price/Earnings & PEG Ratios,” Nasdaq, last accessed September 15, 2021.)
Still, TSLA stock has always sold on potential, and that has rewarded investors for years. Stock investors, after all, are future-focused, more impressed by what companies can offer in a few years’ time then what they can offer today.
So that covers my view on Tesla stock (still bullish), but what about its competitors? Do they have a chance to unseat the king of electric vehicle stocks?
At this moment, I’d say no.
While it’s almost impossible to project what some nonexistent company could do in the future, the past can be informative here.
You may not remember Nikola Corporation (NASDAQ:NKLA), whose electric vehicle stock first hit the scene in early 2020. The company made waves as a potential challenger to Tesla Inc in the electric vehicle space (it even aped the Tesla namesake, Nikola Tesla).
There was a lot of hype, bluster, and excitement—and that was about it. Nikola Corporation released a few interesting EV models, leading the price of NKLA stock to skyrocket and then proceed to collapse over the next year.
And while you could blame the pandemic, that doesn’t make all that much sense, considering that most tech companies fared rather well during the COVID-19 crisis (just look at TSLA stock’s performance in 2020).
In any case, the young upstart proved to be nowhere near ready for the big leagues.
And while a company could theoretically challenge Tesla stock’s dominance in the electric vehicle sector, I actually believe that to be an almost insurmountable challenge.
The reason? Elon Musk.
I mean, there’s a variety of reasons (Tesla Inc’s first-mover status, ambition, technology, name recognition, social value, government contacts, etc.), but Musk is a big difference-maker here.
Love him or hate him, the Tesla Inc CEO is a gifted salesman. Musk has converted millions of people to the church of Tesla so much so that he was able to parlay his status into hosting Saturday Night Live.
CEO as celebrity certainly has its downsides, but compared to a more reviled tech billionaire like Mark Zuckerberg or Jeff Bezos, Musk maintains a pretty healthy following. Sure, he has his haters, but Musk arguably has the most supportive fanbase of any tech billionaire out there.
That fervent cult of personality among retail investors, alongside Tesla Inc’s impressive ambition and ability to attract huge amounts of investments from all channels of the market, makes it hard to unseat by even the most well-backed upstarts with the best tech.
Not to mention that, with its coffers full, Tesla could simply overpower and absorb its competitors, making it a hard task to unseat TSLA stock as the electric vehicle stock king.
If the question is as simple as how to maximize profits in the electric vehicle stock market, I’d say that Tesla stock is still the best bet.
The company has shown its ability to weather a variety of storms that have come its way, from personal scandals, to dangerous-looking fundamentals, to the global pandemic.
What’s more, the company is in such a strong position that it would take a true 180-degree reversal of fortunes to see another electric vehicle stock really challenge its dominance.
That leads me to proclaim that, in my view, TSLA stock remains the top electric vehicle stock on the market.